MDC Partners is to sell a 15% stake in the group to the merchant banking division of Goldman Sachs in a $95m agreement.
The owner of agencies including 72&Sunny, CP+B and Redscout hired Liontree Advisors last year to look at its financial and capital structure strategy amid a disappointing set of results for the third quarter (up to November 2016).
At the time, CEO Scott Kauffman said its performance was simply “not good enough” as it revealed net losses had jumped to $33.5m from $8.6m a year earlier. As a consequence, its share price tanked 21%.
Ending speculation of a sale, MDC said that the move “affirms the value of our world-class agency portfolio, strengthens our balance sheet, and validates a solid finish to 2016 and our prospects going forward.”
MDC Partners will use the investment to pay down existing debt and in return the group said Goldman will get non-voting convertible preference shares. The investment bank’s current managing director for the merchant banking division, Bradley J. Gross, will also join the MDC Partners board of directors.
Kauffman today (15 February) said: "We are extremely pleased to be partnering with Goldman Sachs. Brad and his team bring an exceptional track record and important expertise to our continued pursuit of maximizing long-term shareholder value."
Gross added that Goldman was "excited to partner with MDC to help drive growth and innovation in the marketing and communications industry.”
“The MDC partner agencies are market leaders with strong reputations and a demonstrated history of serving their clients,” he said. “We look forward to working with Scott and his team to further position the company for long term growth."
The deal is expected to close by the end of the first quarter of 2017.